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The annual data that follows pertain to Rays, a manufacturer of swimming goggles (the company had no beginning inventory) Sales Price $47 Variable Manufacturing expense

The annual data that follows pertain to Rays, a manufacturer of swimming goggles (the company had no beginning inventory)

Sales Price $47

Variable Manufacturing expense per unit $20

Sales Commission expense per unit $9

Fixed manufacturing overhead $2,990,000

Fixed operating expenses $230,000

Number of goggles produced 230,000

Number of goggles sold 218,000

Requirements

1.

Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rays for the year.

2.

Which statement shows the higher operating income? Why?

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